The impact of COVID-19 on consumption elasticity of traditional and online food markets in China

Abstract

Extreme events significantly impact consumption, an essential part of the national economy. COVID-19 has undoubtedly hit China's industry hard, including offline catering and tourism. However, it has also made some online sectors thrive. This study uses data from Meituan quarterly financial report from 2017 to 2021, using Eviews and Python to standardize and normalize the data. Then, the vector error-correction model (VECM) and the multiple linear regression model are applied to test the hypothesis. First, the adjustment coefficient and estimated coefficient are used to observe the changes trend of online catering channels after the COVID-19 intervention. Then, the substitution effect from offline to online was assessed using the multiple linear regression coefficients. The epidemic's impact led to significant setbacks in the industry at that time, and consumption also decreased to varying degrees. However, if adjusting fluctuations in overall consumption, online catering channels are more widely adopted after the epidemic intervention. Also, there is a positive substitution effect from offline to online due to the COVID-19. The research results provide suggestions for the catering industry marketers to optimize the operation strategy and timely increase online channels to withstand the impact of the sudden outbreak.